Region’s mid-market private equity deal activity ‘rebounds spectacularly’ during 2021
The Midlands became the second largest region by deal value in 2021 as mid-market private equity investment grew robustly despite uncertainty caused by COVID-19.
Analysis from business advisory firm KPMG show 2021 generated an upturn in both deal volume and value when compared to 2020, with the Midlands proving to be one of the UK hotspots.
The Midlands saw a healthy increase of 54% in deal volumes during 2021, with a total of 86 deals completed in the region, up from 56 in 2020.
And while deal values rose in every area of the UK, the Midlands leapfrogged the North West to become the second largest region by deal value at £5.3bn, up from £3.5bn in 2020. London accounted for the lion’s share with deals worth £21.9bn, up 45% on 2020.
In terms of the proportion of deals completed by region, the Midlands reported the most notable uplift outside of London. The Midlands accounted for just over one in ten (10.7 per cent) of all deals taking place in the region, an increase from 9.8% in 2020. The picture remained largely unchanged elsewhere, with the vast majority of deals – 44.7%, still completed in the capital.
The number of private equity exits completed in the Midlands also increased from 17 deals in 2020 to 25 deals in 2021, further surpassing 2019 levels of activity and ranking the region second only to London. Alongside this, the value of Midlands-based exit deals also accelerated to £2.5bn in 2021, a hearty 133% increase from £1.1bn in 2020.
On a national level, both volumes and values saw a boost, as 803 deals, worth £46.8bn were completed in 2021 – an increase of 40% and 36%, respectively.
KPMG’s latest study also showed that while disruptions caused by the pandemic made 2020 an atypical year for dealmakers, the levels of activity seen in 2021 still surpassed pre-pandemic levels, with deal volumes up 20% and deal values up 15%, compared to 2019.
The UK’s private equity market overall also thrived with a total of 1,545 deals worth £159.2bn completed in 2021, up from 1,117 in 2020 and 1,246 in 2019.
Khush Purewal, partner and head of deals for KPMG in the Midlands, said: “Mid-market private equity deal activity rebounded spectacularly in the Midlands during 2021, as confidence to complete transactions returned and pent-up demand was released. Not only did deal volumes in the region accelerate by 54 per cent last year when compared to 2020, a further uplift on the 23% growth achieved in 2019, but the Midlands also demonstrated extraordinary growth in the value of deals, ranking second only to London and overtaking the North West.
“And while activity did ease slightly in the latter part of 2021 as concerns around inflation, supply chain stability, fiscal-monetary policy and COVID-19 variants came to the fore, there are clear pockets of growth in the Midlands economy and many of the region’s best performing corporates in the mid-market space are continuing to attract strong levels of investment interest. The durability of the Midlands dealmaking community stands the region in good stead to build further on this momentum throughout 2022 and beyond.”
